The Finance Secretary Ajay Bhushan Pandey tells the Parliamentary Panel that the central government is unable to pay the Compensation of G.S.T. at the rate of 14% to the States because of a low collection of G.S.T. tax amount.

This issue regarding the delay in payment of compensation was raised in the Parliamentary Standing Committee on Finance headed by Jayant Sinha of B.J.P. by an opposition party member.

Every month the Central Government compensates all the States of India after all the earlier taxes like C.S.T. and V.A.T. was subsumed due to the introduction of Goods and Services Tax in the year 2017.

Mr Pandey states that the law allows for a relook at the compensation amount if the G.S.T. collection drops by. The opposition party member also said that the government has repudiated all of its commitments which it made while implementing G.S.T. when the States gave up their powers for imposing indirect taxes regarding the compensation to be provided for the States for their sacrifices made, for a period of five years at a rate of 14% starting from the base year 2015-16.

The GST compensation to the States was provided of about Rs 1,65,302 Crore in the financial year 2019-20.

On Wednesday Kerala’s Finance Minister Thomas Issac tweeted on twitter that it would be treated as “brazen betrayal of federal trust.” if the Central Government takes a stand on the GST Compensation cannot be paid by it and if the GST Council revises the present arrangements.

With Warm Regards,

CL Bureau.

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